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Sunday, August 14, 2011

Renewable Energy Act suspension sought

Saturday, July 30, 2011

LOCAL government units (LGUs) and the Association of Geothermal Energy Producing LGUs (AGEPL) are pushing for the suspension of the implementation of Republic Act 9513 or the Renewable Energy Act of 2008.

Ormoc City Mayor Eric Codilla, president of AGEPL, said Section 15c of the law, which provides that power generator or developer using renewable energy should only be subjected to a maximum realty tax rate of 1.5 percent, would greatly affect the operation of the geothermal-host LGU, especially on their Special Education Fund (SEF).

The SEF gets 40 percent of the Real Property Tax (RPT) while the rest is divided between the LGU (70 percent) and barangays (30 percent).

Among the barangays, the host community gets the lion's share of 50 percent while the other half is divided by the rest of the villages."The slashing of one percent of the existing 2.5 percent realty tax from the developers would mean a reduction of our SEF that takes 40 percent of the city's real property taxes," Codilla said.

Ormoc City is host to Energy Development Corp. (ECDC), the city's highest real property taxpayer.

EDC's RPT is expected to drop to P60 million if the law is implemented which will impact on the SEF. Expected to be hit first are the teachers' allowances, hiring of city-paid job order teachers, and participation to provincial, regional and national sports events.

Codilla said AGEPL has already submitted open letters to President Benigno Aquino III asking for the deferment of the implementation of the law. Similar letters were also sent to the Department of Education and Department of Energy for their support.

Codilla said the alliance composed of the cities of Ormoc, Kidapawan (North Cotabato), Sorsogon (Sorsogon), and the towns of Kananga (Leyte), Valencia (Negros Oriental), Sto. Tomas (Batangas), Manito and Tiwi (Albay) have joined the call and would submit a manifesto to the Senate asking to exempt the existing developers from being covered by RA 9513.

"Since RA 9513 is already enacted, the best thing they can do is to weak the law's applicability so that the RPT reduction will be applied to host communities of newly developed renewable energy sources. Applying the law on existing resources is unfair considering the RPT is already part of the developers' production cost," Codilla said.

According to him, power rates of existing plants are based on present tariffs but reducing the RPT will not necessarily redound to lower power rates because RA 9513 does not compel power plant owners to do so and that makes the law advantageous only to investors, and not the government and consumers.

"In the case of Ormoc City, since EDC already existed before the enactment of the law, it should be exempted from this special realty tax rate provided in RA 9513," Codilla said.

Ormoc City currently collects P100 million real property tax from EDC. As of May this year, the city has been utilizing EDC's 1 percent SEF amounting to P40 million to build 186 classrooms and school perimeter fences, to distribute school supplies, to open new high schools and to cover the salaries of 52 job order teachers.

Codilla said that in 2004, the city has collected only P20 million and insisted for the provision in the Local Government Code to collect the actual taxes due for the city.

Since 2006 when Ormoc began collecting RPT from EDC, it has spent more than P237 million to build 183 classrooms, 32 two-unit comfort rooms, 66 perimeter fences, four covered courts, three stages, etc. in different schools. When before, Ormoc classrooms accommodated 85-115 students each, the ratio has gone down to 1:60.

The city has also established the country's first e-learning center and plans to build 10 more similar facilities this year. It allotted P1 million in 2010 to finance 44 scholars and P1.2 million in 2011 for 37 scholars. It also provides school supplies to all elementary pupils in public schools every school year consisting of four notebooks, two pad papers and two pencils.

Meanwhile, the mayor admitted the move against RA 9513 implementation is expected to be difficult but he said he is hopeful of this to succeed to protect the future of education in his city and the rest of the geothermal-host LGUs in the country.

Ormoc is still reeling from the P40 million reduction of its Internal Revenue Allotment after the Supreme Court upheld the conversion of eight new cities.

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